Report: Microsoft Chief Executive Search Hindered By Ballmer, Gates Involvement

Pedro Hernandez covers Microsoft products and services, such as Office, Windows, Windows Phone, Azure and Skype.

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The ongoing presence of Bill Gates and Steve Ballmer on Microsoft’s board is a turnoff for many potential executive candidates, according to The Wall Street Journal

As Microsoft’s chief executive search continues into the new year, the company’s past is reportedly causing candidates to keep their distance.

According to a report in The Wall Street Journal, candidates are wary of the lingering presence of current chief executive Steve Ballmer and legendary co-founder (and ex-chief executive) Bill Gates on the company’s board after a new chief executive is named.

‘Turnoff’

According to the report, “corporate directors, management consultants and some executives contacted about the job say the potential for boardroom clashes at Microsoft is a turnoff”. In meetings with Microsoft’s board, some external executives “expressed concerns about being hamstrung if the two men continue to serve on the board, according to people familiar with their thinking”, they said.

439px-Microsoft_logo.svgNegotiations are said to involve spelling out just how much influence Ballmer and Gates will wield on the new chief executive. “Outside chief executive candidates ‘know that part of what they are negotiating for is the level of engagement’ of Mr. Ballmer and Mr. Gates once the new leader takes charge, a person familiar with the matter said”, according to the Journal report.

Former Apple executive Jean-Louis Gassée, who has served on public company boards, told the publication, “No chief executive worthy of the title wants his or her predecessors second-guessing everything in the boardroom.”

The article notes that if Ballmer and Gates remain on Microsoft’s board, the IT giant “would be an outlier. Just eight companies in the S&P 500 index have two of their former chief executives as directors, according to Equilar Inc., which tracks executive compensation.”

Steve Ballmer announced his impending retirement on 23 August and set a 12-month deadline for his departure. In a statement, he said, “We need a chief executive who will be here longer term for this new direction,” referring to the company’s “One Microsoft” strategy, which kicked off a massive corporate reorganisation in July.

Calls to step down

The selection committee includes Bill Gates. “I’ll work closely with the other members of the board to identify a great new chief executive. We’re fortunate to have Steve in his role until the new chief executive assumes these duties,” he said.

Gates recently faced calls to step down as chairman of Microsoft. In a 1 October Reuters report, some top Microsoft investors echoed some of the concerns expressed by outside candidates for the chief executive role. Among the factors they cite as reasons for Gates to leave are his dwindling shares in the company – he’ll have no financial stake in the company by 2018 at current levels of divestiture – and his role in the selection process.

Before the holidays, Microsoft Director John W. Thompson provided an update on the chief executive selection process, admitting that the company wouldn’t have a new chief executive before the start of the new year. “We’re moving ahead well, and I expect we’ll complete our work in the early part of 2014,” he said.

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Originally published on eWeek.

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